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San DiegoMayor Jerry Sanders is abandoning a potential sale of the Miramar Landfill — a key piece of his fiscal recovery plan — after three private companies withdrew from the bidding process without making an offer.

Instead the mayor said he will move forward with possibly outsourcing the landfill’s operations through managed competition, which allows private firms to compete against city workers for jobs. That option will likely result in far less taxpayer savings than a sale because the city won’t be able to charge the operator a franchise fee of as much as $10 million annually.

The decision ends a seven-month period in which the three firms — Allied Waste Services, Texas Disposal Systems and Waste Management — researched the landfill and negotiated with city officials over various details. In the end, none were willing to submit a formal offer.

“We still believe that selling the landfill was the best option for the city,” Sanders said in a statement. “At the beginning of this process, there was a lot of interest and enthusiasm. But at the end of the day, all of the bidders preferred to run the landfill instead of buy it.”

San Diego faces a $56.7 million budget deficit for the fiscal year that begins July 1 and leaders are exploring a wide range of options to increase revenue or slash expenses. Soliciting bids to take over operations at Miramar Landfill is one of the most frequently mentioned for saving taxpayer money and city leaders even attached it to a campaign to increase the city’s sales tax, which voters roundly rejected in November.

But the potential sale appears to have been doomed by the landfill’s complicated ownership structure and an unwillingness by the private companies to shoulder the financial risk of unknown environmental liabilities.

The city has operated Miramar Landfill since 1959 when it signed a $500-a-year lease deal with the military, which owns the property. The lease, which extends through 2045, changed several times through the years, notably expanding the site from 450 acres to the existing 1,400-acre plot.

The north and south sections of the landfill have already been filled. The active western portion has collected 39 million tons of trash with room for an additional 19 million tons. At the current pace — 988,000 tons of solid waste and 348,000 tons of greenery added annually — the projected closure date is 2022.

City officials were adamant that whoever took over operations would have to assume the landfill’s liabilities, including any costs associated to its eventual closure.

Bob Gregory, chief executive and principal owner of Texas Disposal Systems, said he was “unable to come to a comfort level” in large part because of the environment liability and questions over what role the military would play.

“It’s a wonderful opportunity. We were very excited about the prospect, still are excited about the prospect if they want to do it under a different set of circumstances,” he said. “It was a business deal that had a great deal of financial risk.”

In a statement, Allied Waste also said it would prefer an operational agreement rather than a purchase. A Waste Management official didn’t return a call for comment.

The goal had been to hand the city’s lease over to a private company that would, in turn, give the city a steep discount on dumping fees and pay the city an annual franchise fee of as much as $10 million. That money could then be spent on public safety, parks and libraries.

That’s not possible today. The landfill’s $37 million budget is fee-based and stands apart from the city’s $1.1 billion operating budget. The law does not allow the city to use the fees except at the landfill.

The separate fund also results in the city, which is prohibited from charging most residents for trash pickup, having to pay dumping fees at Miramar of up to $11 million annually from its operating budget.

Now the city will try the less aggressive route of managed competition, a change viewed by some as an opportunity for the roughly 130 city employees who would have lost their jobs had the landfill been sold. Now they’ll be given a chance to submit their own proposal against private firms for the work.

Joan Raymond, head of the city’s blue-collar union which represents many of those workers, was on vacation and didn’t immediately return a call for comment.

City Council President Tony Young said the mayor has taken a prudent approach with the landfill.

“I think we have to have an understanding of what our assets, especially a big asset like that, is worth,” Young said. “Now we’ve found that there’s not a big market for it for whatever reason. I’m actually really happy that now the employees get a chance to bid on it and the taxpayers will be able to get probably a better price in regards to running it because it’s going to have some competition involved.”

The Mayor’s Office is expected to begin the managed competition process for the landfill in May or June, but final approval may not come until mid-2012.

WIH Resource Group is a global leader and provider of comprehensive waste management, recycling, transportation/logistical and business solutions, specializing in, among other services, waste management operational performance assessments, transportation / logistics, alternative fuel use, solid waste planning, waste and recycling market studies, business development and environmental services. Based in Phoenix, the company serves both private and public sector clients throughout North America and globally. Our customers include both public agencies and private sector businesses customers throughout North America. To learn more visit http://www.wihrg.com

Should you have any questions about this news or general questions about our diversified services, please contact Bob Wallace, Principal & VP of Client Solutions at WIH Resource Group and Waste Savings, Inc. at admin@wihrg.com

Faced with rising refuse collection costs, the Town of Smithtown, New York, decided to require its refuse collection contractors to use compressed natural gas (CNG) trucks. It was the first New York municipality to institute such a requirement. On January 1, 2007, the 30 contractor-owned diesel refuse trucks collecting solid waste and recyclables from the town’s 116,000 residents were replaced by 22 CNG models.

Smithtown selected four bidders for seven-year contracts: Brothers Carting, Dejana Industries, Jody Industries, and V. Garafalo Carting. The companies were responsible for buying the new CNG trucks. To offset the higher cost for these trucks versus diesel trucks, the companies had the option of claiming the Federal Alternative Motor Vehicle Credit for up to 80% of the incremental cost. An alliance of local organizations helped the contractors find financing options.

To establish CNG fueling infrastructure, Smithtown partnered with natural gas supplier Clean Energy. With no leasing agreements, access fees, or capital outlay for Smithtown, the contract required Clean Energy to provide the fueling infrastructure and commission local service providers. Because of Smithtown’s new contract with the refuse collectors, Clean Energy had to complete the fueling station in six months–two to four months faster than it usually takes to locate a station, obtain permits, and secure a compressor.

To accomplish this, Clean Energy received permission from the New York Department of Transportation (NYDOT) and Office of General Services to allow expansion of a station in nearby Hauppauge, which Clean Energy already operated for New York State. The Hauppauge expansion supported NYDOT’s goal to increase natural gas use as a vehicle fuel and brought additional revenue to the state of $0.05 per gasoline gallon equivalent. Clean Energy expanded the Hauppauge volumetric gas flow rate from 15 to 2,000 scfm and opened the station within four months.Smithtown entered into an agreement on fuel pricing with Clean Energy through 2013. CNG costs for the refuse trucks started at $2.33 per diesel gallon equivalent (DGE) through 2008 and increase each year to conclude at $2.94 per DGE in 2013. The contracted CNG price could decrease if the price differential between diesel and CNG goes above a set threshold.

“Controlling refuse collection costs for town residents was the primary reason Smithtown chose CNG,” explained the coordinator of the Greater Long Island Clean Cities Coalition. “The commitment from Clean Energy to set a stable fuel price was very important.” Switching to CNG provides environmental and energy-security benefits for Smithtown.

The CNG refuse trucks are projected over the life of the contract to reduce emissions of nitrogen oxides by 265 tons and particulate matter by 15 tons. Smithtown also expects to displace more than 1.5 million DGE of petroleum-based fuel.The benefits are amplified when other towns adopt a similar strategy. Smithtown’s success inspired nearby Brookhaven to plan the deployment of 67 CNG trucks in 2009 in a similar effort.

Clean Cities inspired Smithtown’s move to CNG. In May 2006, Russell Barnett, Smithtown’s Environmental Protection Director, saw a Clean Cities alternative fuel presentation at the Federation of New York Solid Waste Associations Solid Waste/Recycling Conference & Trade Show in Bolton Landing, New York. The presentation persuaded him that CNG was the best choice for Smithtown’s refuse fleet. For more information, contact Russell Barnett.

Source: United States Department of Energy (DOE)

If you have any questions about this news or general questions about our diversified services, please contact Bob Wallace, Principal & VP of Client Solutions at WIH Resource Group and Waste Savings, Inc. at admin@wihrg.com.

The 2nd Annual Waste-to-Fuels Conference & Trade Show will be conducted at the Hyatt Regency Mission Bay, in San Diego, California on May 17-19, 2009.

The Waste-to-Fuels Conference & Trade Show will provide a forum for informing the public and private sectors of the economic and environmental benefits of converting waste materials to alternative fuels such as biodiesel and ethanol as well as energy recovery. Attendees will have excellent networking opportunities and a chance to visit with exhibitors to preview the newest advances in alternative fuel production products and services. The conference will be designed to attract individuals and organizations/companies nationally.

Interested individuals are requested to contact Gene Jones at (800) 441-7949 or by email at gene@swix.ws for further details.

Abstract Deadline: November 30, 2008.

Interested parties wishing to send in an abstract for consideration should send a reply email with the proposed title of your presentation and a sentence or two detailing what the presentation is about.